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Lord Walpole: My Lords, I am also assured by my noble friend that if I put it into coffee through a filter, that will help as well.

Lord Lucas: My Lords, the coffee may do a lot of other damage of course.

The Government have a good record in providing information on the risks from lead, most recently in the leaflet produced last year by the Drinking Water Inspectorate called Have you got lead pipes? More than 100,000 copies of that leaflet were made available. I hope that is some comfort to the noble Baroness, Lady Robson. They were distributed to local authorities, water companies, libraries and in response to any requests that were made. Such leaflets make a valuable contribution but we are considering what more we can do both to make information available and to ensure that it actually reaches those who need it.

There is a role for other sources of information as well; for example, through partnerships with local authorities and others to provide better information or better targeted messages to particular groups; through the water suppliers; through publicising the obligation on water suppliers to replace their lead pipes if household lead pipes are replaced; and through encouraging better take-up of grants or other assistance. Those are all options to be explored and we will welcome other suggestions. However, it is important in doing this that we do not create a scare where none is justified. As the noble Lord, Lord Dubs, said, it is a question of balance and good sense and doing good over a period of time.

My noble friend Lord Bridgeman raised the question of access to information. Ensuring a right of access to environmental information continues to be government policy. The results of all analyses carried out by water companies must be on the public record and freely available. That is something we shall hold them to.

While measures are being taken to replace domestic lead pipes, the Government intend to ensure that water suppliers continue to treat water to reduce its ability to dissolve lead. This will ensure that, even where all the necessary work has not yet been completed inside

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houses, the lead levels in water will be kept as low as possible. We expect that the maximum values for most samples at the tap will be below 30 micrograms per litre, with average lead levels much lower.

The noble Lord, Lord Elis-Thomas, asked about standardisation of data reporting. The Government have limited influence on this but have imposed a standard approach for the data they collect which will, we hope, influence the way in which companies themselves hold data. If the noble Lord has any views on the way in which the Government should collect information, perhaps he will communicate them to us.

I am conscious that I will not have responded to all the points made during the debate. I shall look at the record and write to noble Lords where that is appropriate.

In conclusion, perhaps I may summarise the Government's position as one of welcome for much in the Commission's proposal for a revised directive. However, there is scope for improvement, particularly in relation to certain standards. We shall be pressing for those improvements as negotiations on the proposal get under way.

5.2 p.m.

Baroness Hilton of Eggardon: My Lords, I am grateful to the Minister for what was a positive and encouraging response to our report; in fact, very much more positive than the written response that we originally had from the Department of the Environment. I thank all those who took part in the debate today, both past and present members of the committee. I wish to make only two observations to our Eurosceptics. The first is to the noble Lord, Lord Pearson. I feel that the attitude that no foreigner can be trusted should be consigned to the same era which said that no foreigner's water could be trusted. I spent last week in Sicily and was able to drink the water without fear or doubt.

I should also like to say to my noble friend Lord Stoddart that studies on the effects of lead on children date back to the beginning of this century. That was why lead in paint was abolished--because children who chewed radiators and pipes ended up as mentally defective and with hyperactivity and other behaviour problems. There are extensive psychological studies to that effect.

Lord Pearson of Rannoch: My Lords, since the noble Baroness has been good enough to mention me, I should perhaps inform her that what I was trying to suggest was that our foreign competitors' record on compliance with Community directives and other legislation stands to be judged on its merits. Secondly, I have to tell her that both this year and last year I was foolish enough to drink the water in a well-known French skiing resort. On both occasions, I was incapacitated for two days. So far as I am concerned, it is still Ne buvez jamais l'eau.

Baroness Hilton of Eggardon: My Lords, I cannot cap that. I thank all noble Lords for taking part in the debate.

On Question, Motion agreed to.

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Transfer of Undertakings (Acquired Rights): ECC Report

5.5 p.m.

Lord Slynn of Hadley rose to move, That this House take note of the Report of the European Communities Committee on Transfer of Undertakings: Acquired Rights (Fifth Report, HL Paper 38).

The noble and learned Lord said: My Lords, the noble Lord, Lord Lucas, said that the debate on drinking water had been the most entertaining that he had attended. I have no aspiration to vie with his record in the debate which follows.

The report with which this debate is concerned, if not dealing with a subject which attracts the headlines, is one which deals with issues of considerable importance to employees and of considerable importance in difficult economic times to employers. I can mention the background very briefly. In 1977 the Community adopted a directive to approximate the laws of the member states dealing with the safeguarding of employees' rights on the transfer of a business or part of a business. There was a general agreement that steps should be taken throughout the Community to protect employees' rights on a change of employer. So the broad structure of the directive was that employees' rights would be transferred from the first employer to the transferee employer and the transfer was not to be regarded as a justification for dismissal except where economic or organisational reasons justified a change in the workforce. It was provided in an important provision that there should be consultation with workers before such transfers took place.

In this country the directive was given effect to by regulations called the Transfer of Undertakings (Protection of Employment) Regulations, as amended. They are normally known as TUPE. Since that time there have been some important changes. Internal frontiers have been removed between member states as part of the creation of the single market. That has inevitably led to an increase in the number of mergers, takeovers and transfers of businesses on a trans-national basis within the Community. It therefore became more and more necessary in this context to ensure that workers' rights were preserved.

In addition, over the years the European Court of Justice has decided many cases in which it has sought to lay down an appropriate test. The Commission has come to the view--I believe it is a view shared by all the member states and certainly by both sides of industry--that amendments are now due to the 1977 directive. But the directive cannot be seen in isolation. There are two other directives which are linked with it: the collective redundancies directive, which provides for consultation with workers, and the insolvency directive, which requires that there shall be a guaranteed fund if insolvency results. Indeed, it is the latter directive which is currently under investigation by Sub-Committee E of the Select Committee, under the chairmanship of my noble and learned friend Lord Hoffmann.

I propose merely to underline four of the main points which have arisen for consideration by the Select Committee and its conclusions. These points have led to

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very considerable discussion and we may yet be some way from the adoption of the final directive. I do not regard that as a disadvantage. On the contrary, it is good that both the committee and the speakers in the debate in your Lordships' House should be able to make comments which may have influence on the final decision.

The first of the four points I want to make is this: what should be "an undertaking", or "a part of the business" for the purpose of this directive? The European Court has laid down a test which many find very satisfactory. It says that the decisive criterion is whether the business retains its identity. One looks at all the facts to see whether the operation of the entity has actually continued, or been resumed, in the hands of the new employer. That test appears to have been a manageable one.

The Commission wants to change that. It wants to go further and add that the transfer of an activity, accompanied by the transfer of an economic entity, is to be a transfer, but the transfer of only an activity of an undertaking is not to constitute a transfer. The Commission believes that this new definition clarifies the position. The evidence which the committee received pointed very much in the other direction. Representatives of both employers and employees thought that this was not a helpful distinction to introduce between "activity" and "economic entity" particularly as it was thought that some activities could themselves constitute an economic entity.

Why is this important? It is particularly important in relation to contracting-out where a body, be it a public authority or a private authority, decides to tender competitively and to contract-out particular activities. The question which both sides of industry are concerned with is whether this kind of contracting-out should ever be capable of being a transfer of an undertaking so as to give workers rights on the transfer. For example, we had evidence from the DTI that to include contracting-out in the directive would be restrictive of business freedom. Others thought very strongly that to exclude contracting-out altogether might lead to a lack of employee protection, redundancy, discrimination against older workers and cuts in wages.

We considered in the committee that the Commission's proposal departs from the law as it has been laid down by the Court. We are not satisfied that this proposal is one that should be accepted. We believe that some contracting-out may well justify worker protection in the way contemplated by the directive. It seems to us that the European Court's test as to whether a business retained its identity, looking at all the activities, all the employees and all the transfer of assets, is a safer test to adopt. Therefore, we have come to the view that we should recommend that the Commission's proposal in this particular should not be accepted.

Linked to part of this first question is whether the mere transfer of shareholding could amount to the transfer of an undertaking. It might seem very odd that it should even be considered that it is because, clearly, to transfer the shareholding in a limited company does not of itself change the employee's employer. The

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company which was his employer remains his employer. Yet we had much evidence that employees' rights can be affected whatever the legal form of reorganisation or transfer. There is little practical difference for the worker however the change is done, particularly on a trans-national transfer. We considered at the end of the day, as did the Select Committee on an earlier occasion, that protection of employees' rights should not depend on the legal mechanics of the transfer. We recognise that it may be very difficult to define what share transfers do constitute a transfer of an undertaking, but we believe that that is something that should be looked at.

So much for the undertaking. What about the employees who should be entitled to rely on this kind of directive? There is no definition of "employee" in the 1977 directive. The European Court has said that whether someone is an employee should depend on national employment law. The Commission accepts this, but it wishes to ensure that employees who work on a part-time basis, those who have temporary employment or who have contracts of no fixed duration, should be included within the protection of the directives. Most of our witnesses accepted that, with the large increase in the number of part-time workers and temporary workers, this was a proper course to adopt, but we believe that it would be quite wrong to include within the protection, as may be intended, agency workers who are employed by agencies and who are contracted-out to particular companies for work. It is quite right that they should be covered by the health and safety legislation, but it seemed to the committee that to bring them within the context of this directive would be going too far.

However, we have come to the view that the time has probably come when there should be a Community definition of "employee" for this purpose. That does not mean that "employee" should take on a Community meaning in all contexts. Just as the word "worker" in the treaty has a Community definition, so we believe that, when dealing with the transfer of undertakings, collective redundancy and the insolvency directives, it is right that the test of "employee" should be the same in all member states.

My third point deals with the situation where companies are insolvent. Perhaps the most difficult situation to deal with is when the workers' rights have to be balanced against the desirability of preserving the company and the business--indeed, of continuing and securing jobs. The European Court has so far ruled that where the insolvency procedures aim at ensuring the continuation of a business the directive should apply and that if the insolvency proceedings intend to do no more than liquidate the company and not to keep it going then the directive should not apply.

We find this distinction, which is proposed to be introduced now by the Commission, is a complicated and difficult one. The Commission proposes that the rights of a worker need not be safeguarded if the transfer is of a business subject to bankruptcy or an analogous procedure, with a view to the liquidation of the assets. But in other areas member states may provide that transfer debts arising from an employment contract shall

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not be transferred as long as workers' rights are given protection equal to that required by the insolvency directive.

We accept that this is a very important question as to how far workers' rights can be protected. We believe that some protection is needed for workers and that this probably in the long run should be included in the insolvency directive. But until that happens this directive should specify clearly what kind of insolvency procedures do result in the worker receiving the protection and what are the criteria. The Commission proposal does not do that. It makes it very difficult, particularly in the context of different legal procedures in the member states, to know what is and what is not included.

We had considerable reservations about whether, particularly in the United Kingdom, it would be right to give judicial bodies the power to impose new terms and employment contracts on the workers and employers going through an insolvency process. We are not persuaded that it would work for the employers and employees or the employers' and the employees' representatives to be given the power to impose new terms and conditions on the workers.

My penultimate point concerns the question of joint liability. Under the 1977 directive, member states were given the power to provide that both the transferor and the transferee employer should be jointly liable for debts to the employees and for the satisfaction of the workers' rights on the transfer. Seven member states took advantage of that and adopted a procedure by which there was joint liability on the part of the transferor and the transferee employers. We did not do that in this country. The Commission now thinks that there should be minimum joint liability in respect of obligations which arose from an employment contract, but that the transferor should be liable only for the period up to the date of the transfer. The Commission would like to take that proposal forward. We in the sub-committee are not persuaded that that is needed. Liabilities can, by contract, where desirable or needed, be apportioned between the transferor and the transferee. It did not seem to us that there was any real evidence of difficulties having been caused by the failure to adopt joint liability in the United Kingdom pursuant to the 1977 directive.

Finally, among the most controversial proposals which we had to consider were those involving employers being obliged to consult with and to inform workers where a transfer was intended. The Commission has made two proposals. The content of the first is not absolutely clear, but we think that we could accept it. The Commission proposes that consultation should be held with a view to reaching an agreement between an employer and an employee rather than simply to seek an agreement. That is not controversial.

The controversial proposal is that the Commission suggests that the obligation to consult and to inform workers should apply only to employers with 50 or more workers or where the worker threshold is such that a works council exists. This is a very difficult question. We realise that a balance has to be struck between reducing burdens on small firms and giving protection

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to the workers in those firms. We concluded that the burden imposed on small employers in this proposal is not a heavy one. Moreover, we were impressed by the fact that the Department of Trade and Industry told us that 90 per cent. of transfers involve establishments with fewer than 50 workers and that if the figure of 50 is maintained, something like 35 per cent. of the United Kingdom's workers would be excluded from the protection of the directive. It is probably impossible to arrive scientifically at an exact figure which is the right figure, but on the statistics that we had, and taking into account the level of the burden imposed on the small employer, we came to the view that the right course would be that the obligation should be imposed on employers who employ 20 or more--not 50 or more--workers. We realise that that will not be acceptable to everybody, but it seemed to us to be a fair compromise.

There are many other points of detail in the report--none of them as entertaining as those which I have outlined so far. On that basis I commend the report to the House. I beg to move.

Moved, That this House take note of the Report of the European Communities Committee on Transfer of Undertakings: Acquired Rights (Fifth Report, HL Paper 38).--(Lord Slynn of Hadley.)

5.24 p.m.

Lord Pearson of Rannoch: My Lords, I must confess that I have not read the report in question, but I have listened very carefully to the introduction of the noble and learned Lord, Lord Slynn of Hadley, which was delivered with his usual accuracy and lucidity--

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